Owens & Minor Reports Financial Results for 3rd Quarter 2014
- Consolidated revenues increased 5.1% in the third quarter of 2014
-
Adjusted diluted earnings per share were
$0.42 for the third quarter - Executed a recapitalization plan, providing funding for strategic investments and improving liquidity
For the quarter ended
"We are very pleased with the strong growth we are seeing in our top
line, which we believe is a result of our strategic approach to the
market, as well as the improving healthcare environment," said James L.
Bierman, president & chief executive officer of
Consolidated operating earnings for the third quarter of 2014 were
Third quarter 2014 results also included
Year-to-Date Results
For the nine months ended
Consolidated operating earnings for the year-to-date period of 2014 were
The year-to-date tax rate increased to 43.5%, as a result of the factors that affected the third quarter tax rate.
Acquisitions Update
Effective
Balance Sheet Recapitalization
During the quarter,
In the fourth quarter, proceeds of approximately
Asset Management
The balance of cash and cash equivalents was
Segment Results
Domestic segment revenues for the third quarter of 2014 were
For the third quarter of 2014, Domestic segment operating earnings were
The International segment contributed revenues of
Highlights & Upcoming Events
-
The
Owens & Minor board of directors declared a fourth quarter 2014 dividend of$0.25 per diluted share. The dividend is payable onDecember 31, 2014 , to shareholders of record onDecember 15, 2014 . -
Owens & Minor is scheduled to participate in the 2014Credit Suisse Healthcare Conference onNovember 12, 2014 inPhoenix . The presentation, which will be webcast, is scheduled for11:00 a.m. Mountain Time . -
Owens & Minor has scheduled its Annual Investor Day forFriday, December 5, 2014 , inNew York .Owens & Minor executives will provide an operational and strategic overview, as well as the company's financial outlook for 2015. The event will take place at TheNew York Palace Hotel , beginning at8:00 a.m. EST and concluding at approximately10:30 a.m. EST . A live, listen-only webcast of the briefing will be available on the company website at www.owens-minor.com under the Investor Relations Section. Registration is available via: http://investors.owens-minor.com/registration.cfm
Investors Conference Call & Supplemental Material
Owens & Minor's management team will conduct a conference call to
discuss the third quarter financial results on
Included with the press release financial tables are reconciliations of the differences between the non-GAAP financial measures presented in this news release, which exclude acquisition-related, exit and realignment charges, and the loss on early retirement of debt, and their most directly comparable GAAP financial measures.
Safe Harbor Statement
Except for historical information, the matters discussed in this press
release may constitute forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
those projected. These risk factors are discussed in reports filed by
the company with the
Consolidated Statements of Income (unaudited) (in thousands, except per share data) |
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Three Months Ended |
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2014 | 2013 | |||||||
Net revenue | $ | 2,386,126 | $ | 2,270,547 | ||||
Cost of goods sold | 2,093,643 | 1,997,218 | ||||||
Gross margin | 292,483 | 273,329 | ||||||
Selling, general and administrative expenses | 231,377 | 211,344 | ||||||
Acquisition-related and exit and realignment charges | 13,957 | 2,747 | ||||||
Depreciation and amortization | 13,841 | 12,441 | ||||||
Other operating income, net | (2,069 | ) | (2,418 | ) | ||||
Operating earnings | 35,377 | 49,215 | ||||||
Interest expense, net | 4,304 | 3,389 | ||||||
Loss on early retirement of debt | 14,890 | — | ||||||
Income before income taxes | 16,183 | 45,826 | ||||||
Income tax provision | 9,028 | 17,856 | ||||||
Net income | $ | 7,155 | $ | 27,970 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.11 | $ | 0.44 | ||||
Diluted | $ | 0.11 | $ | 0.44 |
Nine Months Ended |
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2014 | 2013 | |||||||
Net revenue | $ | 6,948,365 | $ | 6,753,008 | ||||
Cost of goods sold | 6,092,413 | 5,927,196 | ||||||
Gross margin | 855,952 | 825,812 | ||||||
Selling, general and administrative expenses | 682,825 | 641,613 | ||||||
Acquisition-related and exit and realignment charges | 24,813 | 5,395 | ||||||
Depreciation and amortization | 41,597 | 37,347 | ||||||
Other operating income, net | (12,046 | ) | (5,693 | ) | ||||
Operating earnings | 118,763 | 147,150 | ||||||
Interest expense, net | 10,893 | 9,835 | ||||||
Loss on early retirement of debt | 14,890 | — | ||||||
Income before income taxes | 92,980 | 137,315 | ||||||
Income tax provision | 40,464 | 54,374 | ||||||
Net income | $ | 52,516 | $ | 82,941 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.84 | $ | 1.31 | ||||
Diluted | $ | 0.84 | $ | 1.31 |
Condensed Consolidated Balance Sheets (unaudited) (in thousands) |
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Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 610,147 | $ | 101,905 | |||
Accounts and notes receivable, net | 590,140 | 572,854 | |||||
Merchandise inventories | 834,476 | 771,663 | |||||
Other current assets | 295,441 | 279,510 | |||||
Total current assets | 2,330,204 | 1,725,932 | |||||
Property and equipment, net | 203,955 | 191,961 | |||||
Goodwill | 274,533 | 275,439 | |||||
Intangible assets, net | 36,457 | 40,406 | |||||
Other assets, net | 98,749 | 90,304 | |||||
Total assets | $ | 2,943,898 | $ | 2,324,042 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 202,401 | $ | 2,428 | |||
Accounts payable | 692,616 | 643,872 | |||||
Accrued payroll and related liabilities | 28,709 | 23,296 | |||||
Deferred income taxes | 39,406 | 41,613 | |||||
Other accrued liabilities | 315,581 | 277,970 | |||||
Total current liabilities | 1,278,713 | 989,179 | |||||
Long-term debt, excluding current portion | 563,882 | 213,815 | |||||
Deferred income taxes | 41,725 | 43,727 | |||||
Other liabilities | 52,054 | 52,278 | |||||
Total liabilities | 1,936,374 | 1,298,999 | |||||
Total equity | 1,007,524 | 1,025,043 | |||||
Total liabilities and equity | $ | 2,943,898 | $ | 2,324,042 |
Consolidated Statements of Cash Flows (unaudited) (in thousands) |
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Nine Months Ended |
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2014 | 2013 | |||||||
Operating activities: | ||||||||
Net income | $ | 52,516 | $ | 82,941 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 41,597 | 37,347 | ||||||
Loss on early retirement of debt | 14,890 | — | ||||||
Share-based compensation expense | 6,136 | 5,162 | ||||||
Provision for losses on accounts and notes receivable | (356 | ) | 179 | |||||
Deferred income tax (benefit) expense | (7,387 | ) | 8,424 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and notes receivable | (21,456 | ) | (20,703 | ) | ||||
Merchandise inventories | (63,883 | ) | (23,690 | ) | ||||
Accounts payable | 54,634 | 93,950 | ||||||
Net change in other assets and liabilities | 3,131 | (21,285 | ) | |||||
Other, net | 1,322 | (1,159 | ) | |||||
Cash provided by operating activities | 81,144 | 161,166 | ||||||
Investing activities: | ||||||||
Additions to property and equipment | (36,169 | ) | (25,144 | ) | ||||
Additions to computer software and intangible assets | (17,988 | ) | (20,361 | ) | ||||
Proceeds from sale of investment | 1,937 | — | ||||||
Proceeds from sale of property and equipment | 151 | 2,020 | ||||||
Cash used for investing activities | (52,069 | ) | (43,485 | ) | ||||
Financing activities: | ||||||||
Long-term debt borrowings | 547,693 | — | ||||||
Cash dividends paid | (47,335 | ) | (45,587 | ) | ||||
Repurchases of common stock | (9,934 | ) | (15,701 | ) | ||||
Excess tax benefits related to share-based compensation | 514 | 733 | ||||||
Proceeds from exercise of stock options | 1,180 | 4,821 | ||||||
Purchase of noncontrolling interest | (1,500 | ) | — | |||||
Debt issuance costs | (4,178 | ) | — | |||||
Other, net | (5,671 | ) | (6,769 | ) | ||||
Cash provided by (used for) financing activities | 480,769 | (62,503 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (1,602 | ) | 723 | |||||
Net increase in cash and cash equivalents | 508,242 | 55,901 | ||||||
Cash and cash equivalents at beginning of period | 101,905 | 97,888 | ||||||
Cash and cash equivalents at end of period | $ | 610,147 | $ | 153,789 |
Financial Statistics and GAAP/Non-GAAP Reconciliations (unaudited) |
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Quarter Ended | ||||||||||||||||||||
(in thousands, except ratios and per share data) |
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Consolidated operating results: | ||||||||||||||||||||
Domestic | $ | 2,262,081 | $ | 2,187,535 | $ | 2,148,915 | $ | 2,213,949 | $ | 2,175,663 | ||||||||||
International | 124,045 | 118,323 | 107,465 | 104,575 | 94,884 | |||||||||||||||
Net revenue | $ | 2,386,126 | $ | 2,305,858 | $ | 2,256,380 | $ | 2,318,524 | $ | 2,270,547 | ||||||||||
Gross margin | $ | 292,483 | $ | 282,272 | $ | 281,195 | $ | 291,263 | $ | 273,329 | ||||||||||
Gross margin as a percent of revenue | 12.26 | % | 12.24 | % | 12.46 | % | 12.56 | % | 12.04 | % | ||||||||||
SG&A expenses | $ | 231,377 | $ | 225,838 | $ | 225,610 | $ | 222,043 | $ | 211,344 | ||||||||||
SG&A expenses as a percent of revenue | 9.70 | % | 9.79 | % | 10.00 | % | 9.58 | % | 9.31 | % | ||||||||||
Operating earnings, as reported (GAAP) | $ | 35,377 | $ | 37,101 | $ | 46,284 | $ | 50,934 | $ | 49,215 | ||||||||||
Acquisition-related and exit and realignment charges | 13,957 | 7,593 | 3,262 | 7,049 | 2,747 | |||||||||||||||
Operating earnings, adjusted (Non-GAAP) | $ | 49,334 | $ | 44,694 | $ | 49,546 | $ | 57,983 | $ | 51,962 | ||||||||||
Operating earnings as a percent of revenue, adjusted (Non-GAAP) | 2.07 | % | 1.94 | % | 2.20 | % | 2.50 | % | 2.29 | % | ||||||||||
Net income, as reported (GAAP) | $ | 7,155 | $ | 19,876 | $ | 25,485 | $ | 27,942 | $ | 27,970 | ||||||||||
Acquisition-related and exit and realignment charges, after-tax | 10,297 | 5,095 | 2,222 | 5,024 | 1,899 | |||||||||||||||
Loss on early retirement of debt, after tax | 9,092 | — | — | — | — | |||||||||||||||
Net income, adjusted (Non-GAAP) | $ | 26,544 | $ | 24,971 | $ | 27,707 | $ | 32,966 | $ | 29,869 | ||||||||||
Net income per diluted common share, as reported (GAAP) | $ | 0.11 | $ | 0.32 | $ | 0.41 | $ | 0.44 | $ | 0.44 | ||||||||||
Acquisition-related and exit and realignment charges | 0.17 | 0.08 | 0.03 | 0.08 | 0.03 | |||||||||||||||
Loss on early retirement of debt | 0.14 | — | — | — | — | |||||||||||||||
Net income per diluted common share, adjusted (Non-GAAP) | $ | 0.42 | $ | 0.40 | $ | 0.44 | $ | 0.52 | $ | 0.47 | ||||||||||
Financing: | ||||||||||||||||||||
Cash and cash equivalents | $ | 610,147 | $ | 92,027 | $ | 182,373 | $ | 101,905 | $ | 153,789 | ||||||||||
Total interest-bearing debt | $ | 766,283 | $ | 221,496 | $ | 217,261 | $ | 216,243 | $ | 216,850 | ||||||||||
Stock information: | ||||||||||||||||||||
Cash dividends per common share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.24 | $ | 0.24 | ||||||||||
Stock price at quarter-end | $ | 32.74 | $ | 33.98 | $ | 35.03 | $ | 36.56 | $ | 34.59 |
Use of Non-GAAP Measures
This earnings release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). In general, the measures exclude items and charges
that (i) management does not believe reflect
Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
Summary Segment Information (unaudited) (in thousands) |
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Three Months Ended |
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2014 | 2013 | |||||||||||||
% of | % of | |||||||||||||
consolidated | consolidated | |||||||||||||
Amount | net revenue | Amount | net revenue | |||||||||||
Net revenue: | ||||||||||||||
Domestic | $ | 2,262,081 | 94.80 | % | $ | 2,175,663 | 95.82 | % | ||||||
International | 124,045 | 5.20 | % | 94,884 | 4.18 | % | ||||||||
Consolidated net revenue | $ | 2,386,126 | 100.00 | % | $ | 2,270,547 | 100.00 | % | ||||||
% of segment | % of segment | |||||||||||||
Operating earnings (loss): | net revenue | net revenue | ||||||||||||
Domestic | $ | 50,797 | 2.25 | % | $ | 51,213 | 2.35 | % | ||||||
International | (1,463 | ) | (1.18 | )% | 749 | 0.79 | % | |||||||
Acquisition-related and exit and realignment charges | (13,957 | ) | N/A | (2,747 | ) | N/A | ||||||||
Consolidated operating earnings | $ | 35,377 | 1.48 | % | $ | 49,215 | 2.17 | % | ||||||
Depreciation and amortization: | ||||||||||||||
Domestic | $ | 8,986 | $ | 8,805 | ||||||||||
International | 4,855 | 3,636 | ||||||||||||
Consolidated depreciation and amortization | $ | 13,841 | $ | 12,441 | ||||||||||
Capital expenditures: (1) | ||||||||||||||
Domestic | $ | 11,077 | $ | 10,032 | ||||||||||
International | 4,257 | 4,426 | ||||||||||||
Consolidated capital expenditures | $ | 15,334 | $ | 14,458 | ||||||||||
(1) Represents additions to property and equipment and additions to computer software and separately acquired intangible assets. |
Summary Segment Information (unaudited) (in thousands) |
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Nine Months Ended |
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2014 | 2013 | |||||||||||||
% of | % of | |||||||||||||
consolidated | consolidated | |||||||||||||
Amount | net revenue | Amount | net revenue | |||||||||||
Net revenue: | ||||||||||||||
Domestic | $ | 6,598,531 | 94.97 | % | $ | 6,474,069 | 95.87 | % | ||||||
International | 349,834 | 5.03 | % | 278,939 | 4.13 | % | ||||||||
Consolidated net revenue | $ | 6,948,365 | 100.00 | % | $ | 6,753,008 | 100.00 | % | ||||||
% of segment | % of segment | |||||||||||||
Operating earnings (loss): | net revenue | net revenue | ||||||||||||
Domestic | $ | 151,849 | 2.30 | % | $ | 155,364 | 2.40 | % | ||||||
International | (8,273 | ) | (2.36 | )% | (2,819 | ) | (1.01 | )% | ||||||
Acquisition-related and exit and realignment charges | (24,813 | ) | N/A | (5,395 | ) | N/A | ||||||||
Consolidated operating earnings | $ | 118,763 | 1.71 | % | $ | 147,150 | 2.18 | % | ||||||
Depreciation and amortization: | ||||||||||||||
Domestic | $ | 26,772 | $ | 26,775 | ||||||||||
International | 14,825 | 10,572 | ||||||||||||
Consolidated depreciation and amortization | $ | 41,597 | $ | 37,347 | ||||||||||
Capital expenditures: (1) | ||||||||||||||
Domestic | $ | 40,110 | $ | 34,506 | ||||||||||
International | 14,047 | 10,999 | ||||||||||||
Consolidated capital expenditures | $ | 54,157 | $ | 45,505 | ||||||||||
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Total assets: | ||||||||||||||
Domestic | $ | 1,834,169 | $ | 1,747,572 | ||||||||||
International | 499,582 | 474,565 | ||||||||||||
Segment assets | 2,333,751 | 2,222,137 | ||||||||||||
Cash and cash equivalents | 610,147 | 101,905 | ||||||||||||
Consolidated total assets | $ | 2,943,898 | $ | 2,324,042 |
Net Income Per Common Share (unaudited) (in thousands, except per share data) |
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Three Months Ended |
Nine Months Ended |
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 7,155 | $ | 27,970 | $ | 52,516 | $ | 82,941 | ||||||||
Less: income allocated to unvested restricted shares | (150 | ) | (186 | ) | (453 | ) | (541 | ) | ||||||||
Net income attributable to common shareholders - basic | 7,005 | 27,784 | 52,063 | 82,400 | ||||||||||||
Add: undistributed income attributable to unvested restricted shares -basic | — | 59 | 26 | 185 | ||||||||||||
Less: undistributed income attributable to unvested restricted shares -diluted | — | (59 | ) | (26 | ) | (185 | ) | |||||||||
Net income attributable to common shareholders - diluted | $ | 7,005 | $ | 27,784 | $ | 52,063 | $ | 82,400 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares outstanding — basic | 62,175 | 62,605 | 62,238 | 62,678 | ||||||||||||
Dilutive shares - stock options | 4 | 26 | 7 | 41 | ||||||||||||
Weighted average shares outstanding — diluted | 62,179 | 62,631 | 62,245 | 62,719 | ||||||||||||
Net income per share attributable to common shareholders: | ||||||||||||||||
Basic | $ | 0.11 | $ | 0.44 | $ | 0.84 | $ | 1.31 | ||||||||
Diluted | $ | 0.11 | $ | 0.44 | $ | 0.84 | $ | 1.31 |
truitt.allcott@owens-minor.com
or
chuck.graves@owens-minor.com
Source:
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